HSBC's Douglas Flint reveals bank's $2bn bonus pool

Douglas Flint, the new chairman of HSBC, has told MPs that the group's
investment bankers are likely to share a bonus pool of "around $2bn"
(£1.24bn).

The revelation, which marks the first time the bank has defined its bonus pool, has been taken as an indication that the bank is not expecting to lower its pay pool from last year, despite the Government's specific demands.

HSBC Hldgs

Mr Flint told the Treasury Select Committee: "We haven't determined what it's going to be this year but it's around two billion [dollars]."

The bank later confirmed that its investment bankers were paid $2bn last year from the group compensation pool of $4.7bn.

David Cameron has demanded that the bonus pools are lower than last year at all banks involved in the Project Merlin talks with the Treasury.

Analysts said they do not expect HSBC to cut the group's bonus levels since revenues are expected to more than double to around $18bn.

Mr Flint told the MPs HSBC had shifted $150m of its bonus pool to boost salaries, but he insisted this was an attempt to satisfy regulatory demands and not to dodge the rules.

On Project Merlin, Mr Flint said he saw the "advantage" of reaching an agreement with the Government and "very much hoped [the talks] will conclude".

He also told MPs that HSBC was "not trying to leave London". But he said that the bank faced regular questions from institutional investors about the "costs and benefits" of being based in the UK.

He described the Government's bank levy as a "tax on being headquartered in London", which was one of the factors that would be considered at HSBC's regular review of its headquarters that is due this year.

Separately, the Committee took evidence from Graham Beale, the chief executive of Nationwide who was highly critical of the UK's overhaul of financial regulation.

The boss of Britain's biggest building society said that the Financial Services Authority (FSA) had "not understood" the differences between mutual companies and the big banks. He said that the rules, from the capital requirements to the bank levy and pay rules, were designed for banks and hit mutual companies "disproportionately".

He was scathing of the watchdog's Mortgage Market Review. He said: "I do not think the FSA did a full economic assessment in terms of understanding the implications of the review on the ability of borrowers to borrow from banks or building societies, and when they did they found there was an awful lot of unintended consequences."

Mark Hoban, the Financial Secretary of the Secretary, is set to give evidence to the Committee on Wednesday.